Posts tagged ‘Parliament’

The legislation enabling charities to use the “new” Charitable Incorporated Organisation (CIO) structure was laid before Parliament last October and is being slowly implemented during 2013.

The journey

The concept of a “simple” corporate structure was identified and debated when the Charities Act 1992 was first published and the CIO proposal developed during the late 1990’s.

The Home Office submitted a white paper entitled “Charities and Not-for-Profits: A Modern Legal Framework” in 2003 and the CIO structure finally became law as part of the Charities Act 2006, but it wasn’t until Lord Hodgson published his five year review of the Charities Act 2006 in 2012 and the Charities Act 2011 was issued that Parliament passed the CIO regulations for England & Wales and the Charity Commission could begin registering CIOs.

Still relevant?

The length of time taken to get to the current “implementation phase” has however dampened the initial enthusiasm for this new structure that enables Trustees to manage the activities and assets of the charity as a separate legal entity and benefit from limited liability, in the same way as a corporate entity, but without the need to comply with Company law. I can see that this may be a reasonable option for a new organisation, but for existing charitable organisations (registered or not) I have yet to be convinced that the benefits outweigh the hassle, and if any form of finance is required, I don’t see it as an option at all.

So far…

During January to May 2013 a mere 200 CIO’s have been registered, which I believe is partly due to the rather extended phased implementation, set out to assist the Charity Commission in dealing with the anticipated workload, but more likely the confusion over the tangible benefits of the new structure.

The future…

In 2014, Charitable Companies and Community Interest Companies (CICs) will be able to apply for CIO status, but considering the painful conversion process and the lack of understanding, particularly for those with debt finance, I doubt that the Commission will be dealing with a huge rush.

The information provided in this blog illustrates my opinions and experiences, it does not constitute advice and I do not accept responsibility for any actions taken or refrained from as a result of reading this post.

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You know you’re too busy….

You know you have a great sales pipeline and you also know that another pair of hands would free up your time. You want to work on your business as well as in it. So what’s stopping you from making the leap from business owner to employer?

It doesn’t have to be complicated

Taking on your first employee doesn’t have to be complicated, especially if you prepare for it in advance. Regardless of the fact that you have a small business, as soon as someone agrees to work for you and you agree to pay them for the work they do, you take on certain responsibilities for them. That may sound a bit scary but it doesn’t have to be.

Your obligations

You need to be aware of your obligations, most of which are common sense, and have a plan to meet them.

They are as follows:

(i) To pay wages

Sounds pretty obvious, doesn’t it, but what would happen if you had a particularly tough month or if a couple of customers don’t pay their bills on time? You need to have a contingency plan and informing your employee that you can’t pay their wages that month is not enough! Do you have enough money in the bank to cover at least 3 months salary for them? It’s really important to communicate with your employee at all times, especially since they will be relying on their salary to make ends meet.

(ii) Not to make unauthorised deductions

You can’t deduct money from an employee’s wages unfairly or without getting their approval in advance (another reason why it’s essential to have an employment contract!)

You can only make deductions from wages in certain circumstances:

if there is legal authority to do so, e.g. by Act of Parliament – income tax, National Insurance Contributions etc;

by contract of employment which might provide for deductions to be made in certain specific circumstances, e.g. fines for disciplinary offences;

or by individual agreement where an employee might agree for the deduction for union subscriptions or to reimburse their employer for overpayment of wages.

Remember that you will be paying employer’s national insurance on top of the employee’s salary so you will have to include it in your calculations.

(iv) To take reasonable care of your employee

This is a wide-ranging duty and covers both physical care and psychiatric care (i.e. not to expose employees to psychiatric harm). As your business grows, this will encompass policies like a zero tolerance approach to discrimination and bullying but that doesn’t mean you should ignore such things until you reach a certain threshold. The same goes for health and safety – just because you need 5 employees before the law says you need a written health and safety policy doesn’t mean you should ignore your obligations to provide a safe working environment.

As an example, have you considered where your new employee will work? You may be quite happy working in your spare room or in a garage conversion on the side of your house but you need to put yourself in their position. If there isn’t room for them to work comfortably and safely, you need to consider other options.

(v) Not to breach mutual trust and confidence

This obligation refers to your working relationship with your employee. There are three fundamentals that should govern your behaviour as an employer:

Be fair

Be consistent

Be nice

If you practice these without fail, you will find that you’re in the best position to preempt difficult situations and deal with the majority of problems that may arise.

Don’t be scared to take on your first employee. Just be prepared!

Guest author: Katherine and her partner Jason are successful growing their professional HR consultancy business, by sticking to their core values and Keeping HR Simple!

If you have any questions regarding this post, please leave a comment below or contact Katherine and Jason on 0800 458 6582.

The information provided in this blog illustrates my opinions and experiences, it does not constitute advice and I do not accept responsibility for any actions taken or refrained from as a result of reading this post.